Ally Of Ukrainian Ex-PM Sought Plan To Import U.S. Gas To Ukraine

A Texas-based firm was hired by a company linked to former Prime Minister Yulia Tymoshenko's political party to develop a plan to import U.S. liquefied natural gas (LNG) into Ukraine.

It is the latest known example of politically connected people seeking to profit by delivering surplus U.S. natural-gas production to the former Soviet state, which is trying to wean itself off dependence on Russian energy.

An attempt by two associates of Rudy Giuliani -- President Donald Trump's personal lawyer -- to export U.S. LNG to Ukraine became an element of interest in the House of Representatives' impeachment hearings.

Ukraine is seeking alternatives to natural gas from Russia amid tense relations with the Kremlin. Russia annexed Ukraine's Crimean Peninsula in March 2014 and is backing separatists in the Donbas region.

Ukraine last month received its first shipment of U.S. LNG through Poland. Ukraine does not have its own LNG terminals.

Linden Strategies, a firm with Republican Party ties, hopes to build an LNG receiving terminal near the Ukrainian city of Odesa on the Black Sea to import U.S. energy, founder Stephen Payne told RFE/RL in a statement on December 5.

Payne's firm was paid nearly $250,000 during 2018 by Maryland-registered shell company ITBC to develop a plan to import LNG, according to a Foreign Agents Registration Act (FARA) filing made public on December 5. Payne said the payment was an investment in the project.

ITBC is connected to Mykhaylo Sokolov, a former regional leader of Tymoshenko's Batkivshchyna (Fatherland) party, according to the FARA filing. He could not be immediately reached by phone.

"The registrant (ITBC) served as a conduit for Mr. Sokolov to pay a Houston-based consulting firm, which specializes in oil and energy issues, to develop a proposal for the delivery of liquefied natural gas to Ukraine,” the filing stated along with the dates of the payments to Linden Strategies.

Payne said he was "surprised" to see his firm mentioned in the FARA report because it was purely a "commercial transaction."

"Additionally, the funds we received from ITBC were an investment into our LNG project with very specific repayment terms, in addition to ITBC receiving a small stake in the project," he said in the statement.

Payne said Sokolov hosted him in Ukraine and introduced him to potential business partners. He said progress on the project had been slow due to Turkey blocking LNG tankers crossing the Bosporus into the Black Sea.

"If this issue is resolved, we look forward to reengaging in the Ukrainian energy market to bring U.S. LNG to Ukraine and other Black Sea nations," he said.

Ukraine produced about 21 billion cubic meters (bcm) of gas in 2018 while it consumed about 31 bcm, with the gap filled by Russian gas imported through third countries.

A new Russian gas pipeline expected to open early next year would reroute a large portion of its exports to Europe and could make it more difficult for Ukraine to import the gas from third countries.

Bulgaria, another Black Sea state, is also seeking to import U.S. LNG. Bulgarian Prime Minister Boyko Borisov discussed the issue at a bilateral meeting in the Oval Office with Trump last month.

Payne, who has been active in the energy industry of the former Soviet Union for decades, had ties to the administration of President George W. Bush. The LinkedIn profile of his son, an associate at Linden Strategies, shows him with Vice President Mike Pence.

Payne was questioned by the House Oversight and Government Relations Committee in 2008 about allegedly soliciting donations for Bush's future library in return for meetings with top officials.

Lev Parnas and Igor Fruman, Giuliani's associates who were arrested in October on charges of violating campaign-finance laws, met in Texas earlier this year with an executive at Ukraine's state-owned gas company to discuss LNG imports.

Those discussions did not bear fruit.

Lobbying For Tymoshenko

The FARA filings show that ITBC separately made payments of $450,000 to the Livingston Group -- founded by former Republican lawmaker Robert Livingston -- from July 2018 to March 2019 in part to lobby the interests of Tymoshenko, who ran for president of Ukraine in March and lost in the first of two rounds to front-runner and eventual winner Volodymyr Zelenskiy.

Shortly before Ukraine's snap parliamentary elections in July, the Livingston Group sought to set up meetings or calls between Tymoshenko and Secretary of State Mike Pompeo, Pence, and Senate Majority Leader Mitch McConnell, according to FARA filings published in October. It is unclear if those meetings and calls took place. Tymoshenko could not be immediately reached.

Part of the Livingston Group's work included the publication of an opinion piece two days before the July 21 parliamentary elections touting Tymoshenko as the best choice for prime minister.

"Put simply, there is no one in Ukraine who can match Yulia Tymoshenko in both experience and global connections," the piece said.

Zelenskiy's Servant of the People party won a majority in the parliamentary elections, giving the president the power to appoint his own prime minister without the need to compromise with other parties. Tymoshenko's party garnered less than 6 percent of the seats.

The Livingston Group's contract with ITBC expired at the end of July, according to the filings.